European banks pay back Madoff victims

A host of banks, including HSBC, have had to reimburse international investors
for a combined $15.5bn (£10.8bn) of losses associated with convicted
fraudster Bernard Madoff's collapsed hedge fund.

By Edmund Conway

11:28PM BST 25 May 2010

Some 20 European banks have agreed to provide the cash to investors, according to a lawyer representing victims of the convicted New York asset manager.

Javier Cremades, who helped create a legal network to pursue investor complaints about Madoff, said banks in France, Germany, Portugal, Spain and the UK have settled with investors. However, he added that lenders in Switzerland had remained resistant, in part because of the country's strict bank secrecy laws.

He said: "The Swiss system is the toughest one." However, he added that settling should "not [be] expensive at all", with the alternative being a "huge reputational issue... at a time confidence is not in abundance."

The $15.5bn total has been shared among around 720,000 investors outside the US. Spain's Banco Santander has said that its clients may have lost €2.3bn (£1.96bn) with Madoff. HSBC declined to comment.

American victims have been less successful recovering funds, in part because many invested directly with Madoff, or through smaller managers known as "feeder funds".